Considering a new smartphone contract and new phone with AT&T? Well, don’t even think about trying to end your contract early as the Early Termination Fee (ETF) is about to sky rocket.

Currently AT&T charge $175 for ETF, but from June 1 it is being increased to $325 for smartphones regardless of whether you are a new subscriber or renewing your contract.

The Wall Street Journal first broke news of the change, but dallasnews.com managed to talk with AT&T spokesman Mark Siegel who explained the decision:

The idea is, and we think that it’s fair approach, that if you spend less on a device, your early termination fee should be less. If you spend more, your early termination fee should be more. This move, what we did today, is unrelated to any device announcement or future plans.

Although AT&T remains $25 cheaper than Verizon’s ETF price, both companies may face questions from the FCC who has noted the fees are both “substantial” and increasing.

There are a number of reasons AT&T could have decided to do this. The most worrying one for the company would be people terminating their contracts to go to another network. With the iPhone an exclusive it already has quite a tempting smartphone to offer customers, but if it is still losing customers then raising the ETF by such a large amount is going to be a real discouragement to go elsewhere.

Another reason could be that it sees Android handsets as a real threat to the iPhone in the near future. The latest handsets from HTC are highly desirable, so AT&T could be figuring customers may be willing to spend $175 on an ETF to go elsewhere. At $325 that decision is really going to hurt.

If you are on existing AT&T contract this won’t affect you until renewal time. If you’re considering an iPhone this must be a consideration before signing up with AT&T now.

Reader Comments

raidet

Trying to force us to do business with them? We are not amused. If I have to pay, I’ll pay, but there’s no damn way I’ll be forced to stay in a contract with these crooks.

robertsgt40

I originally had singular because I despise AT&T(I’m not a big fan of those that collaborate with the govt for wire taps). Then AT&T bought Singular. My contract is up this summer. See ya AT&T. There business model involves destroyong or buying thecompetition. I’ll pay a higher fee anywhre as long as there is an alternative to AT&T.